THE Ministry of Trade and Industry (MTI) is maintaining Singapore’s gross domestic product (GDP) growth forecast at 4 to 6 per cent for 2021. For 2020 as a whole, the Singapore economy contracted by 5.4 per cent, a reversal from the 1.3 per cent growth recorded in 2019.

In its report released on Monday, MTI’s outlook for 2021 considers progress made in Covid-19 vaccine development and deployment, with approved vaccines being rolled out around the world. Advanced economies like the US and the eurozone are deemed likely to reach population immunity by the second half of this year, which should spur their recoveries.

On the other hand, growth prospects are weighed down by the recent resurgence in infections in regional economies such as Malaysia and Indonesia which have brought back lockdowns and restrictions. On balance therefore, Singapore’s external demand outlook remains “largely similar” compared to three months ago, according to MTI.

The ministry also highlighted “significant” uncertainties and risks in the global economy, including the trajectory of the pandemic, the risk of financial system stresses due to a protracted economic recovery, excessive private sector indebtedness arising from loose monetary conditions, and continued geopolitical uncertainty.

Against this backdrop, Singapore’s economy is expected to see a gradual recovery throughout 2021, though with an uneven outlook across sectors. Outward-oriented sectors are tipped to benefit from the pick-up in external demand, with manufacturing likely to expand faster than previously projected due to robust semiconductor demand from the 5G and automotive markets.

The information and communications, as well as the finance and insurance sectors, are also expected to continue to post steady growth supported by sustained enterprise demand for IT and digital solutions, and credit and payment processing services respectively.

Recovery is expected to be slower and weaker in the hard-hit tourism, aviation and consumer-facing retail and food and beverage services. Construction activity will continue to be dampened by the requirement for safe-management measures.

The sectoral outlook for 2021 generally echoes the uneven sectoral performance that characterised 2020. Most sectors contracted last year amid the worst full-year recession since Singapore’s independence. The construction sector shrank by 35.9 per cent, from the 1.6 per cent growth posted in 2019. The services-producing industries contracted by 6.9 per cent, reversing the 2 per cent growth recorded in 2019.

Growth was seen, however, in pockets of resilience. The manufacturing sector expanded by 7.3 per cent, supported by robust expansions in biomedical manufacturing, electronics, and precision engineering, turning around from the 1.5 per cent contraction in 2019. The finance and insurance sector expanded by 5 per cent, and the information and communications sector by 2.1 per cent.

Source: https://www.businesstimes.com.sg/government-economy/mti-maintains-singapores-gdp-growth-forecast-at-4-to-6-for-2021